What Do You Think is Harder Right Now, Working for the White House or Being a Retail Analyst?
Equities start the day lower after I disband my home council. My son kept pushing for more video games, my wife was demanding new landscaping, and my daughter wanted endless gift cards to Justice (whatever that is) so I decided it was in our nation’s best interests to dissolve it. Hoo boy you can’t read the news nowadays without some kind of political tilt can you? I get it, things are volatile right now, but you know who doesn’t seem to care? Mr. Market. So I wonder….why is that? Why doesn’t the market read the NYTimes or Foxnews and get on FB and start raging like literally every single person I know? Well my friends watch me tiptoe thru a minefield here. First I think it doesn’t care because markets generally like gridlock. The less interference we get from Washington the better. I mean MIFID 2 came from a bunch of bureaucrats and look what that did. Ugh. Now I’m sure the market would lovingly embrace a corporate tax cut or further de-regulation but in the absence of that “no new stuff” is fine. Second you have to realize that Presidents get far too much credit and far too much blame for what goes on in the economy. The U.S. is an $18 trillion dollar beast, you really think a President has any levers to control that? Please. Lastly we have to remember that the economy and earnings are all that really matter to investors, not statues and marches. As long as those remain good and sentiment about the future doesn’t get decimated then the bull market remains intact even in the face of endless headlines that will be forgotten in mere days. Look, I love this country and I’m always optimistic about her future, you should be too. Don’t get depressed over endless media coverage of a TINY SLIVER of our nation’s history, take solace in the fact that guys like Elon Musk, Jeff Bezos, Tim Cook, and Bob Iger go to work every day to make the world a better place to live in. Those guys are on my team, I’ll back them any day of the week and twice on Friday.
After the open it was down and to the right because apparently everyone was concerned about the employment status of Gary Cohn. Imagine your job was SO IMPORTANT that a whiff of you leaving knocked half a percent off the S&P500. That kind of stuff blows my mind. I mean if someone thought I was about to leave Baird the stock would probably triple. I drink a LOT of coffee here so I’m sure margins would soar (oh man I’m done, nice knowing you all). So yea, the market sold off because it thought Cohn might be abandoning ship (turns out he’s not) and macro data wasn’t good enough to counter act that (weekly claims beat, philly fed inline). One of the biggest losers was a retail stock! Can you believe that? What do you think is harder right now, working for the White House or being a Retail Analyst? LB fell 3.5% to its lowest level since 2012 after reporting earnings last night. I don’t know what to say any more about retail, this stock was at $94 in Jan 2016 (we rate neutral). BGG also got crushed falling 13% after reporting earnings. Wait….wait…..are people buying lawn mowers and lingerie on AMZN now? Stop the world I want off. Other losers were NTAP, CTL, ADP, and AAL. There were actually a few retail stocks among the biggest GAINERS like AAP, TSCO, COH, and GPS but go ahead and pull up charts of those and let’s chat about pyrrhic victories. By lunch we were grinding lower, down 1%, as the market just seemed fed up with Washington DC.
The rest of the day was nothing but downside as the market showed us what red numbers really mean. 2,430, down 1.5%, driven by nothing but frustration and antipathy. Of all indices the Rus2k looked the worst as it broke its 200 day to the downside and tech got absolutely smashed because people use it as a source of funds. I guess all those “where is the volatility” articles may need to be rewritten? Yikes, what an ugly day my friends.That being said, Robin Wigglesworth (what an awesome name) of the FT pointed out that, on average, $SPX falls >1% about 36 times a year. Today is the FOURTH such fall of 2017. FOURTH. Doesn’t strike me as panic time just yet. Final score: Dow -124bps, S&P500 -154bps, Nasdaq -194bps, Rus2k -178bps.
Volume was high. Our desk was better to buy. Buying in Software and Industrials. Selling in Cmdtys and Airlines. Shorting in Materials.
- Succinct Summation of the Day’s Events: The market is fed up with DC noise, took its ball and went home
- Household debt….the never-ending scare tactic!! Barry says “stop it” Household borrowing has reached new records. Big deal. Personal income has grown much more.
- 12 month average of Leading Indicators…you need to watch this every single month
- This right here: “The boom in America’s rental-housing market may be drawing to a close. New construction of apartments and other multifamily projects slumped in July to the second-lowest level in nearly four years, government data showed Wednesday.
- Has everything to do with this: first-time homebuyers tend to buy homes that need repair and remodel ... “we anticipated this happening with millennials coming into an age where they start to form families, children, or pets or whatever their family unit might look like. They're moving into homes, which bodes very well for us and to your point, it extends the recovery." I mean it’s almost like millennials eventually decide to leave their apartments and start a family in a home. Who woulda thunk it?
- Simple tactics to be more successful: I’m all in on #2, im gonna push for nap pods at Baird. Who’s with me?
- Never a motorcycle, ever
- This is actually a thing in 2017. Underwater marble racing.
- Things Michael should’ve invented #125
- I think I need a banana hammock in my life
- Look, Im gonna go on this workout, I’ll let you know how it goes
Tonight we are going to forgo the comedy because I think a little inspiration is in order. Tonight’s will come from a young Khazak boy who refused to give up. I think there’s a metaphor in here for all of us.
Have a good night